28.2 C
Niagara Falls
Tuesday, May 21, 2024
Editorial: Part 2: Unfair taxation puts hotels at disadvantage
The Lake Report's weekly editorial. File

Last week we talked a little about how the town has already missed out on $600,000 in revenue by not charging its accommodation tax fairly to all accommodation businesses.

And fairness is the key word here because, as it stands, legitimate businesses, like our town’s reputable hotels are at a disadvantage by being forced to charge a tax that the majority of short-term rental businesses (essentially small, unsupervised hotels) are exempt from.

It’s surprising that the hotels haven’t taken the town to court over it.

And it begs the question: Why the continued special treatment for short-term rental owners?

Could it be a result of the town’s short-term rental committee, the one that’s no longer active but was stacked with industry stakeholders?

That’s rhetorical.

One of those committee members and stakeholders is David Levesque, former president of the NOTL B&B Association, who recently told The Lake Report that it’s too difficult for rental businesses to collect the tax.

We have serious questions about that suggestion.

Industry-leading booking companies like Airbnb and VRBO make it easy for operators to charge additional fees, whether it’s a flat fee or a percentage of the nightly rate. Some companies even work with municipalities to collect and remit those taxes.

As for other transactions, even simple payment software, such as Square, can include additional fees with relatively little training at all.

Levesque, who seems to understand some form of the tax is definitely coming for rentals, argues it should instead be a flat fee.

That could work but unless the revenue from that fee is equal to what would be generated by the accommodation tax, we see it as a desire for more special treatment.

It’s worth adding that the pushback to the tax is senseless to begin with, because the tax isn’t paid by the individual businesses – it’s collected from guests and doesn’t hurt the businesses’ bottom line.

Since it isn’t hurting the bottom line, it’s only affecting bookings, potentially. And since the tax isn’t applied across the board, it’s fair to surmise it might only hurting bookings at hotels. Therefore council is allowing short-term rental businesses to have an unfair advantage over hotels.

Picture this: You’re a guest staying in town and you find out the hotels charge you a tax that almost all Airbnbs don’t — which choice are you going to lean toward?

Again, it’s sort of staggering that there hasn’t been a lawsuit yet. That could be because the hotel industry wasn’t in favour of the tax and doesn’t want to be seen as promoting it.

Last week Lais Hotels executive Bob Jackson said he isn’t sure why the tax isn’t charged to all accommodation businesses. We agree with that sentiment.

But this argument is really just the tip of the iceberg and why it’s unfair to not make the tax apply to every accommodations business, regardless of size.

For example, how about rental operators who own more than one property in town through the same company? Currently there’s a loophole for them. Technically the entire business might have a lot more than four rooms, yet, they’re not being forced to collect the tax because of the way the town classifies each rental.

And let’s not forget, the town doesn’t have any sort of temporary rezoning plan in place, so these businesses also do not pay their fair share of commercial taxes either — despite being full-fledged commercial operations.

And in case evidence is needed to support these rentals as being commercial businesses, one only needs to know how some owners just hire companies to manage them on their behalf. It’s undeniably an industry.

Not by coincidence, the owner of Niagara Holiday Rentals, a business that manages rental properties, was also on the town’s stacked short-term rental committee.

Is there a pattern here of favouring short-term rental stakeholders? Again, that’s rhetorical.

Next: We’ll look at some easy solutions to even the stakes for all accommodation businesses in NOTL.

Subscribe to our mailing list